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A turbulent year has ended with the Federal Government attempting to lift the economy out of the doldrums following the COVID-induced recession, a rise in diplomatic tensions with China and a by-election.

The final sitting fortnight of the parliamentary calendar has also seen hot debate around issues such as superannuation and IR reform. An already legislated increase to the mandatory rate of superannuation from 9.5 per cent to 12 per cent could be delayed due to the pandemic. The Government has argued that an increased super contribution would come at a cost of lower wages but is yet to make a final decision.

It has also been reported that the government is considering a single, higher rate of pay to retail, hospitality and restaurant workers. The reform would stem from the IR working groups created following the pandemic and comprising employer and union groups, with the trade-off being higher wages for workers but with a more simplified framework for businesses to navigate. It is expected that a package will be introduced to parliament next week.

Treasurer Josh Frydenberg has declared that Australia is on track for economic recovery. Indeed, the National Accounts figure for GDP released on Wednesday confirmed that Australia is now technically out of its first recession in 30 years. It was also revealed this week that two million workers left the JobKeeper program in October because of increased business activity and more stringent eligibility criteria. It has been forecast that the drop in demand for the scheme will save the budget around $6 billion in the December quarter.

It is promising news and, with state governments further easing business restrictions and lifting border closures, there are promising signs that the economy is headed in the right direction. However, a full recovery is unlikely to be achieved until a vaccine is discovered and hopefully this can be achieved early in 2021.

On the foreign relations front, headlines in recent days have been dominated by heightened tensions with China. Australia’s largest trading partner, who recently produced a 14-point document airing grievances with the Australian government, slapped a 200% tariff on Australian red wine exports last week. Then on Monday a controversial tweet by a member of the Chinese foreign ministry elicited another strong response from Canberra.

How this tense period in the relationship between the two nations is navigated poses one of the most significant foreign policy challenges to confront Australia in recent memory. Undoubtedly both countries have benefited from a close economic partnership over recent decades. Ensuring that the relationship is managed appropriately stands to be the biggest foreign affairs issue to watch in 2021.

Finally, the year has also ended with the LNP retaining the safe seat of Groom at the November 28 by-election. Garth Hamilton has comfortably won the seat, albeit with a swing towards Labor, and will become the new member of parliament for the Darling Downs seat.

The outcome is unlikely to have much implications for either the LNP or Labor. Government’s do traditionally receive swings against them in by-elections and the fact the contest received little media attention means the result will hardly send reverberations through either major party.

However, any by-elections that occur in 2021 are likely to receive a far greater share of the spotlight. We’re now beyond the halfway mark of this term of parliament and there are rumours that the Prime Minister may look to head to the polls in the second-half of next year for an early election. It stands to be another hectic year in federal politics in 2021.

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